You can’t do much about your 2013 taxes, except contribute to an IRA. Maybe.

If you, like most Americans, are spending the next few weekends slaving over a hot tax form, you’re probably wondering: Can I claim my dog as a dependent, and if I do, would she be able to get Social Security, too?

The answers are no, and no. Also, you should probably not take up a life of crime. There’s precious little you can do — legally — to reduce your 2013 taxes. But cheer up. You can do things now to reduce your 2014 taxes.

By and large, the opportunity to reduce your 2013 tax bill went away at midnight on Dec. 31. The exception: You may be able to make a deductible IRA contribution for the 2013 tax year.

The key factor is whether you have a retirement plan at work. Retirement plans include 401(k) plans and other plans you contribute to, as well as pension plans. Box 13 on your W-2 form will let you know whether you’re covered in a retirement plan.

If you’re not covered by a retirement plan at work, you can make a deductible IRA contribution no matter what your income. But there are income limits if you’re married and your spouse is covered by a retirement plan. In that case, you’ll need a modified adjusted gross income of $178,000 or less to make a fully deductible contribution. If your AGI was between $178,000 and $188,000, you can get a partial deduction for your contribution.

It’s more difficult to deduct an IRA contribution if you are covered by a retirement plan. In that case, if you’re a single filer, and your AGI is less than $59,000, you can make a fully deductible IRA contribution. If your AGI was more than $59,000 and less than $69,000, you can make a partial deduction. For people who are married and filing jointly, the limits are $95,000 for a fully deductible contribution and $95,000 to $115,000 for a partially deductible contribution.

If you’re eligible, you can contribute up to $5,500, and $6,500 if you’re 50 or older. What else can you do to make 2014 a happier tax time?

• Invest in index funds. If you own stock funds in a taxable account, you’ll always owe taxes on gains when you sell. But many actively managed funds distribute capital gains to shareholders each year. For example, Fidelity Blue Chip Growth paid out $1.29 per share in long-term capital gains for the 2013 tax year. If you owned 1,000 shares, you had a capital gains payout of $1,290, on which you would owe capital gains taxes. Most taxpayers pay a 15% capital gains tax, so you’d owe $193.50 in extra taxes.

Index funds do relatively little trading, and thus usually pay out very little in the way of capital gains. Fidelity’s Spartan 500 Index fund, for example, had no capital gains distribution in 2013. Of course, if you’re investing in a retirement fund, you don’t have to worry about capital gains distributions. But index funds usually have lower ongoing costs than actively managed funds, too.

• Switch to municipal bonds. Interest from munis is free from federal and, in some cases, state income taxes. Right now, thanks to the woes of places like Detroit and Puerto Rico, muni yields are unusually high. A 30-year municipal bond yields 3.88% now, according to Bloomberg, vs. 3.64% for a 30-year Treasury bond. A person in the highest tax bracket (39.6%) would have to earn nearly 6% to get the same amount of interest after taxes as a muni bond that yields 3.60%.

• Sell your losers. Losing money on a stock is about as much fun as gout. But tax losses are extremely valuable. Let’s say you have a $5,000 long-term capital loss, meaning you sold a stock or mutual fund for a loss after holding it for a year or longer. You can use that loss to wipe out up to $5,000 in long-term gains, such as those gnarly ones your mutual funds dole out. If you have more losses than gains, you can deduct up to $3,000 in losses from your income. And if you still have losses left over, you can carry them into the next tax year.

• Add to your retirement account. If you’ve got Daddy’s Trust to see you through retirement, you don’t need a retirement fund. Most of us, though, have to save for retirement, so contribute to your company’s 401(k) plan. You’ll reduce your income, which, in turn, reduces your taxable income. And, of course, you’ll have money in retirement.

• Take the retirement savings contribution tax credit. A deduction reduces the amount of income you pay taxes on. If you’re in the 25% tax bracket, a $1,000 deduction will reduce your tax by $250. But a tax credit reduces your taxes dollar for dollar. The saver’s tax credit was made to encourage low-income people to save for retirement. If you meet the criteria and you put $1,000 into your employer’s 401(k) plan, you not only reduce your taxable income, but you get a $500 tax credit.

The drawback, of course, is that people who meet the income guidelines for the retirement savings contribution tax credit rarely have enough income to save for retirement. “I’ve found few who qualify and who have the money,” says Melissa Labant, director of tax advocacy at the American Institute of Certified Public Accountants.

Finally, keep an eye to where you hold your investments. Bonds, bank CDs and other investments that throw off lots of income should be in a tax-deferred retirement account. Stocks and other investments that are taxed at lower capital gains rates should be kept in taxable accounts, when possible.

Once you’ve done your taxes, you probably feel like you should deduct all your pets and a couple of the neighbor’s kids, too. Try to resist that. But with a little work, you can reduce 2014 taxes.

Courtesy of USA Today

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